Graduates needn’t be hostages to advance contracts

The seniors I teach at Sagami Women’s University have already handed in their final dissertations and now await graduation in March. You can feel that a heavy burden has been lifted from their shoulders: “My friends and I are going to Fiji for our graduation trip”; “I’ve already reserved the traditional gown I’m going to wear to the graduation ceremony.”

In April they will go out into the world as shakaijin, or full-fledged adult members of society. As I’ve mentioned before, graduation and finding employment are seen as a single event in Japan. Students at university weigh up their strengths and interests, research the industry they aspire to join, perhaps do an internship, and then apply and interview for jobs. This whole process is called shūkatsu.
If an employer says they want you to start next April, then that is effectively an official promise of employment, or naitei. In a previous column, I explained that the employer is, in a sense, legally bound by the naitei, but today I would like to discuss the obligations of the prospective employee.
All of my current students have already received their naitei from assumed future employers. Many companies insist that students affix their personal seal to a written pledge to work for them.

My students often ask me if they are legally bound to work for the company once they put their stamp to such a pledge. “Could a company sue me for damages if I later back out?” they fret.

To answer this question, we must first ascertain the legal status of naitei. Case law — specifically, the Dai-Nippon Printing case (verdict handed down July 20, 1979) — has established that the naitei is a labor contract that has not begun yet, meaning that either side can still back out. In most cases, the start date of the contract is April 1.

But corporations are clearly in a stronger negotiating position. The foundational principle of labor law in Japan is that an overwhelming power imbalance exists between employer and employee. A student is not even a worker yet, so she or he stands at an even greater disadvantage; in a way, they are hostage to the employer in whose hands their career rests. So whereas either side has the legal right to cancel the contract, the employer must have a rational, reasonable, socially acceptable reason for withdrawing their offer (such as a falsified resume or the commission of a serious crime). In contrast, the future worker has no such formidable burden of justification for backing out. My students can, if they like, simply change their minds.

There is no particular legal restriction on students lined up for future employment canceling the naitei. This is because of the aforementioned power imbalance, but also because all workers are guaranteed the right to choose their occupation under Article 22 of the Constitution.
But in that case, you may ask, what does such a pledge to join a company even mean? Well, although there is no legal compulsion, there is social and ethical pressure not to back out after making such a promise. Japan’s Civil Code (Minpō) stipulates that any employee must give their employer two weeks’ notice before resigning. Having established that the naitei is legally an employment contract of sorts, the would-be employee must give the same fortnight’s notice before the start of the contract if they would like to back out.
So, my students have no reason to fear being sued for damages. Some companies even demand that a student’s teacher write a recommendation letter for them. This is an effort by the company to bring even professors and lecturers into the equation, to apply even greater social pressure on the student to keep their promise. Nevertheless, the student still has the freedom to opt out.
I would recommend that students tell their teachers if there is a possibility that they might back out, in cases such as when the employer is not their first choice. Plus, although students are under no legal obligation, the socially responsible thing to do would be to try to avoid canceling the arrangement at the last minute. Contact the company as soon as you decide that you no longer want to work for them.

These days some companies go further and even demand that students fulfill certain tasks, submit reports, train at the company and attend seminars and other events in the months leading up to April. This almost never happened 20 years ago when I was doing my shūkatsu, yet about half of my current students are being imposed upon by their future employers in such a fashion.

Of course, they do not get paid a single yen for all of these tasks. I asked my students if they could refuse such orders, and they replied that whereas the companies don’t insist that they absolutely must complete the tasks, the students fear that if they don’t, they could lose the naitei.

This infuriates me. Corporations are interfering with the precious hours of these students’ college days. Students not yet employed have to spend long hours doing the bidding of their future employers for free, all while fearing that they could lose their spot in the company at any time. The companies are holding them and their time hostage.

The Tokyo District Court handed down a ruling in January 2005 in a case involving marketing communications firm Sendenkaigi. The company had given a naitei promise of employment to a graduate student and had him undertake a number of tasks and undergo training while he was working hard on his Ph.D. At one point he refused to attend a training course demanded by the company, saying that the extra (free) work was interfering with his ability to make progress on his doctoral dissertation. The company responded by saying he had two choices: start the process of joining the company all over again or extend his period of probation. The graduate student refused both options and the company cancelled the naitei.

The court ruled that the cancellation was illegal because “there were no grounds for ordering training before entering the company, something that ordinarily takes place after joining.” The court also said that the employer can do no more than request such tasks be completed — and that the future employee can choose to comply or not. The company was ordered to pay restitution of ¥500,000, plus one-month’s salary and ¥100,000 in legal fees.

This is a reassuring albeit common-sense verdict. University students should be focusing on their studies. Work for a future employer that doesn’t pay you yet should be optional, yet students feel they can’t say no. There is unspoken compulsion at play here. I strongly believe that college kids should, free of exploitative employers, enjoy their studies and college life right up until the very end.

Hifumi Okunuki teaches at Sagami Women’s University and serves as executive president of Tozen Union. She can be reached at Labor Pains appears in print on the fourth Monday Community Page of the month. Originally published in the Japan Times.